Bad Credit Repair With A Secured Credit Card–Can A Secured Card Be Used To Improve A Credit History?

Bad credit has become a problem for many individuals and those who have seen their credit score drop are looking for ways in which they can improve their bad credit situation. For instance, homeowners who may want to refinance for a lower mortgage interest rate may be unable to take advantage of today’s low mortgage rates due to the fact that they have a poor credit score. A bad credit score can bleed over into areas of one’s financial life, like getting a low mortgage interest rate, so it’s understandable that many people to improve their score quickly.

A secured credit card, which is offered by a number of large financial institutions, can be helpful in repairing one’s bad credit score. New laws that make credit cards more affordable and have reined in unfair practices or fees on the part of credit card lenders, but there are still people who have low credit scores that have seen their interest rates on unsecured credit cards rise to an unmanageable level.

New credit card laws will not stop cardholders from paying for a low credit score due to the fact that they are seen as a credit risk and a lending institution should have the right to protect their interests by raising credit card rates on those cards associated with a bad credit cardholder. Yet, a secured credit card shows a bank that the cardholder is serious about repairing their credit score due to the specifics that are associated this type of card.

A secured credit card requires the deposit of a sum of money into a bank account, which sets the credit limit and secures the card. From a lender’s point of view, a cardholder who obtains this type of credit card understands that if they don’t make payments on charges they will lose money and do further damage to their credit score. So, a secured credit card can be more affordable since the cardholder usually has the most to lose.

However, no matter an individual’s reasons for wanting to improve their credit score, a secured credit card is not a guarantee for a better credit history or score. Using a secured credit card along with smart financial habits will be the only way to improve a bad credit score and build a better credit history. Secured cardholders will have to learn to budget, save money, and simply live within their means so that they can make charges on credit and promptly pay them off, which is how they will build a better credit history and eventually a good credit score.